Beadell Scraps Plan to Buy Mine as Share Sale Fails

By Jesse Riseborough

July 4 (Bloomberg) -- Beadell Resources Ltd., an Australian gold explorer, pulled out of the proposed A$280 million ($269 million) acquisition of a mine from Newcrest Mining Ltd. and Lion Selection Ltd. after failing to complete a share sale.

``Prevailing market conditions prevented the completion of the equity raising required,'' Perth-based Beadell said today in a statement. Melbourne-based Newcrest, Australia's biggest gold producer, will refund a A$2 million deposit, Beadell said.

Beadell had planned to sell shares worth A$235 million, almost 10 times its market value, to help fund the purchase of the Cracow mine in Queensland state. Access to debt and equity funding for smaller mining companies is more difficult and costly following a global credit crunch this year, Goldman Sachs JBWere Pty said in an April report.

Beadell, backed by Oxiana Ltd., dropped as much as 15.5 cents, or 39 percent, to 24.5 cents. It traded at 25 cents at 12:01 p.m. Sydney time on the Australian Stock Exchange. Newcrest gained 0.7 percent to A$30.20 and Lion fell 6 percent to A$1.72.

Beadell had planned to sell shares at 40 cents apiece in a sale managed by Merrill Lynch & Co. and Morgan Stanley, according to a June presentation by Chief Executive Officer Peter Bowler. It also agreed to a A$50 million loan from Australia & New Zealand Banking Group Ltd.

Newcrest will retain its 70 percent stake and operational control of the mine, which produces more than 100,000 ounces of gold each year, it said in a separate statement. Melbourne-based Lion said it will also retain its 30 percent stake though partner Newcrest has an option to buy it for A$80 million.

The Cracow mine generates about A$50 million to A$60 million in earnings before interest, tax, depreciation and amortization annually, Beadell said.

To contact the reporter on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net